kdakota630 (29.54)

Peter Schiff - The Bernanke Shock

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The financial world was shocked this month by a demand from Germany's Bundesbank to repatriate a large portion of its gold reserves held abroad. By 2020, Germany wants 50% of its total gold reserves back in Frankfurt – including 300 tons from the Federal Reserve. The Bundesbank's announcement comes just three months after the Fed refused to submit to an audit of its holdings on Germany's behalf. One cannot help but wonder if the refusal triggered the demand.

Either way, Germany appears to be waking up to a reality for which central banks around the world have been preparing: the dollar is no longer the world's safe-haven asset and the US government is no longer a trustworthy banker for foreign nations. It looks like their fears are well-grounded, given the Fed's seeming inability to return what is legally Germany's gold in a timely manner. Germany is a developed and powerful nation with the second largest gold reserves in the world. If they can't rely on Washington to keep its promises, who can?

The reason why the US is holding Germany's gold was based on a fear of the former Soviet Union from over runnng Germany in some kind of war scenario. Since the breakup of the Soviet Union that scenario is more remote, hence they want their gold. Nothing wrong with that.

Well I have to be honest with you porte that english translation was horrible, half the sentences made little sense, but I stand corrected if my first response wasn't the main reason. I forget where I had read that.